§ 58. Mr. Hoyleasked the Chancellor of the Exchequer what is the present position in relation to the proposed changes in the method by which the EEC budget is financed.
789W
§ Mr. Joel BarnettThe Council agreed on 21st November that, from 1st January 1978, with the introduction of the full own-resources system, financial contributions will be replaced by the revenue obtained from VAT by applying a Community rate not exceeding 1 per cent. to a base determined in a uniform manner in each member State in accordance with the recently agreed Sixth Directive on VAT. VAT will finance the residual part of the budget after payment of all established agricultural levies and customs duties.
VAT own resources cannot, however, be introduced on 1st January 1978 unless at least three member States have actually implemented the Sixth Directive. The present position is that the United Kingdom is the only member State in a position to implement the Sixth Directive, and if two more member States do not implement it before 1st January 1978 GNP-related financial contributions will be used for the 1978 budget.